Miniclipper Logistics: "We're an IT company that happens to deliver stuff!"

They may take different sides on Brexit, but when it comes to running a haulage business the husband and wife team at Miniclipper Logistics are definitely on  the same page.

Despite the challenging times, the company has just revealed a 17% increase in turnover for the year ending 31 May 2019, which MD Peter Masters tells me has allowed a “fourfold increase in profit” on the previous year’s trading.

Joining us at Miniclipper’s Leighton Buzzard HQ is wife Jayne, who has been running the company with Peter since his father retired in the 1980s: “Peter’s motto is that we’re not a transport company, we’re an IT company that happens to deliver stuff,” she laughs. “But we live and breathe this business.”

As if to prove her point, the pair have made a big investment in their IT operations over the last year.

They’ve just spent £120,000 on the rollout of a new warehouse management system – OpenWMS – which will allow clients to view real-time pick and despatch activity and live KPI reporting.

They’ve also successfully implemented Paragon route optimisation software, costing £80,000, across all delivery modes. This has resulted, Peter explains, in significant improvements in service performance and fuel efficiency leading to a reduction in the company’s carbon footprint.

“What we’re pushing at the moment is ETA technology,” he says. “It basically predicts when we should be delivering. Customers want that and they want it to be accurate.

“We punch above our weight when it comes to technology. We’re an SME, not Eddie Stobart, but you have to keep ahead of the game. It’s daunting but it’s just a question of managing it.”

Jayne agrees: “The system allowing us to advise customers what time the trucks are arriving to collect their freight works really well. We have to make sure the vehicle gets there within 30 minutes either side of the booked delivery slot, otherwise it's a fail.”

A member of Palletline, the company's revenue is split roughly 40% warehousing and 60% haulage. It operates what Jayne calls a “flat management structure” – five directors and 10 managers in a staff of around 140.

Clients come from a wide range of sectors including retail, clothing, foods, raw materials, packaged chemicals and industrial products. The company uses 40 rigid and articulated vehicles and is a pallet carrier for Sainsbury’s and Amazon.

Another recent focus has been growing the warehousing, which is currently “101% full”, Peter says. “Our top ten customers, out of the 80 who use us for storage, expect us to have extra capacity at all times. When they grow by 10% you have to find quite a lot of extra room. We’ve had to take on overflow warehousing at Dunstable.”

Demand for storage has grown significantly over the past few years with an increasing number of companies outsourcing their warehousing.

Generally, it’s been a year that’s been “strong for warehousing growth, less so for transport,” he explains. “Companies have stockpiled but they’re not selling any more. The picking activity of the orders hasn’t increased.

"So we’ve got full warehouses but it’s not quite flowing through. That might be a Brexit issue because everyone’s a bit nervous and the economy is a bit flatter so people are holding on and seeing what happens. There’s a bit of a blockage in the supply chain.”

However, the pair are confident that a lot of customers will soon be de-stocking.

“They’ll have expiry dates and they’ll have to stop bringing stock in,” Peter says. “So after Christmas it will start to flow out and that will perhaps ease the pressure on property and real estate. We’re in a difficult situation because if a customer tells us they have an extra 500 pallets coming in, we have to provide a solution, or we risk disappointing them which isn’t an option.

“What’s interesting is that I have a lot of customers with a European base, and ultimately they’re saying if there are potential delays we need a UK warehouse. That’s music to my ears. In a strange way it helps us as a business. People will need a UK base if they’ve got a two-day lead time and they’re in Calais jumping through more hoops.”

Optimistic view

Both take a fairly optimistic view on the likely impact of Brexit and say most hauliers see it as more of an “inconvenient interruption” than a calamity for their businesses. Peter voted to leave while Jayne laughs that he “voted against me”.

“I’m a reluctant Brexiteer,” Peter says. “My wife is a bit different. I didn’t really mind which way it went. People who ship to Europe tended to be remainers but I didn’t know which way to jump.

“In the short term the economy will be damaged but you’ve just got to get on with it. We’ve got a great future as a country but there’ll be bumps along the way.”

He points to countries like Switzerland and Norway that have happily coped with their isolation as proof that the UK can survive and prosper. Hauliers might just need to alter their routeing strategies, he believes.

“Countries will still trade, it’s just that you’ll end up with additional admin to get stuff across the border but eventually it will sort itself out," he argues.

So ultimately things won’t be much different post-Brexit?

“The problem could be with the short haul, which comes in through the tunnel or to Dover. We might need to be a bit more creative on the routes we use because Calais might get blocked up.

“Our problem is there’s a pinch point between Folkestone and Dover. Look at Switzerland; if you can’t get in at Geneva you get in 20 miles down. Here you’ve got a funnel through Kent.”

Jayne admits Miniclipper will have to place its customers under closer scrutiny in the months ahead and is expecting some of them to struggle with cash flow.

“We’ll be watching customers closely in terms of credit terms and their ability to pay,” she says. “We’ve got to make sure we keep getting the money in, because there will be one or two casualties no doubt. If they’re exporting and they can’t get their goods out of the country they’re not going to get paid fast enough. And if they can’t import fast enough they’ll have nothing to sell. So it’s going to cause a bit of a cash crisis in a smaller business that’s not robust.”

Peter fears smaller haulage firms may end up desperately chasing the wrong kind of business. ”If they aren’t profitable in the first place and they chase cheap business but haven’t got the reserves, there might be some casualties,” he agrees. “When the market contracts and volume contracts people go after more dubious opportunities - customers or business you wouldn’t normally explore.

“Some people might do it to try to improve turnover but it’s not profitable or sustainable. We’re fortunate that we’ve built a good profitable business so we’ve got wriggle room if there’s a tough time but there are probably other haulage operators out there who have ridden close to the wind.”

The company is increasingly careful about who it deals with, Jayne explains: “If they approach us, the first thing we look at is their credit rating, second whether it’s B2B or B2C. They can’t dictate orders over the phone. We need them on a system – instant data coming from their system to ours. Typically the smaller the customer the more administration there is and we have tended to move away from them.”

Challenges

So aside from Brexit what are the main challenges Miniclipper faces?

“Constantly changing legislation,” Jayne says ­­- before Peter quickly adds three more to the list.

“Our biggest problems are warehouse capacity, road congestion and lack of staff migration,” he reveals. “For us, immigration is a good thing. Some of our best people were Hungarian and some have gone back.

“If we needed to take on large numbers of drivers we’d find it difficult. It’s a good profession, the health and safety is excellent. We need good drivers, we don’t need people who are 17."

Peter is also sceptical on the government’s plans to achieve zero emissions by 2050, insisting that switching their Euro-6 diesel fleet to gas or electric would be a non-starter.

“Our nearest gas filling station is Crick, in Northamptonshire, or London,” Jayne explains. “Unless you’re a massive company and can put your own facilities in it’s not practical. Our vehicles can’t drive an hour-and-a-quarter up the road to Crick to fuel up.”

Peter also warns that the extra weight of a battery could mean you’d need to double the number of trucks. His views seem to tally with those of the RHA who told delegates at this month’s Freight in the City Expo that the government’s advice to hauliers over cutting emissions is riddled with ambiguity.

“The mayor of London is setting targets that the technology can’t keep up with. Electric is coming in big time for cars but cars are quite light. If you’re pulling a big load in a truck you need a bit of torque in the engine.”

Jayne agrees: “You can only do it in urban areas because you have to keep refuelling or recharging. If you’re using a 7.5-tonner and have a heavy battery on it you can only carry 1,500kg. It will happen but it will have to be staged. If they bring it in too aggressively they’ll trip up.”

Challenges aside though, the pair are happy with the way business is developing. The recent hike in profits is impressive against the backdrop of Brexit although they insist big growth spurts aren’t what Miniclipper is all about.

“We grow at 10% to 15% a year,” Peter says. “We’re not trying to take on the world. We’ve been going for 48 years and we want to keep going - so we're planning succession within our family to ensure we successfully achieve a third generation business.”